The Impact of Remittances on Mexican Governance

Abstract

Last year, remittances contributed more foreign income to Mexico’s economy than any single natural resource, including oil. Given this large source of income, my thesis compares the impact of remittances to the more conventionally discussed impact that natural resources have on governance known as the natural resources curse. I ask the question, Are remittances a resource curse? This paper makes its own definition of the resource curse, and proceeds to expose the ways in which remittances—both standard and collectivized—effect politics and the government’s provision of public goods. My analysis shows that remittances, though spurring some negative political behaviors by government officials and exasperating inequality through Tres Por Uno, do not fit the rubric of a resource curse. Rather, on a net basis remittances cause outsized improvements in the provision of public goods and increase democratic tendencies. As part of this finding, I propose a quota system to more evenly distribute government remittance matching grants, as well as a very small tax on all remittance inflows into the country that would create more mandated funds for pressing public infrastructure needs while distributing them more fairly at the same time.